Hotels are 24/7 operational businesses and the larger ones such as the Savoy in London are in normal (non-Covid) times, a constant hive of activity as guests and visitors come and go. Running a hotel is without question an ongoing management challenge and it’s one that many people would shy away from as you literally ‘live the job’.
So why would an experienced property developer with a legal background choose to acquire, reconfigure and run a formerly run-down seaside hotel in the knowledge that their life would very likely be taken over by the challenge? This was my first question to property developer Peter Cadwallader when I met him at his new venture the Port in Eastbourne, Sussex.
“I am a qualified solicitor and that was my initial career,” said Peter, “but I quickly realised that working in the City was not for me. I went on to work for a hedge fund and part of my reasoning for that move was to meet high net worth individuals, although at the time I really was not sure what I actually wanted to do with my career. I then met Richard Koch, who wrote the book, the 80:20 Principle and we got talking. At that time I had started to do some small property conversions in London with apartments but I didn’t have the financial resources to do it at scale.
“Thankfully Richard and I reached an agreement and he gave me £1m to scale up and take on more projects whilst I also put in funds myself. We initially took on an old HMO property in Ealing in west London and converted it into seven apartment units. This was in 2015-16 and we did really well with that project, which was my first larger development at over 5,000 sq ft. We bought it unconditionally and then achieved the planning permission on the back of a pre-app.
“To be fair, our timing on that first deal together was perfect as the market really helped, and that is something I now really believe that all developers need to take note of. Market timing is so critical, and it is what catches many people out, but on the back of that project’s success, Richard committed to investing substantially more money and we raised further equity from other HNWs to really scale up the developments.
“From there we had an ambition to create a branded property development business with a view to being able to sell property at a premium on the back of the brand reputation. In hindsight I would say it’s a hard thing to do with residential property developments but we went on to acquire £30-40m worth of property in the space of 18 months with an end GDV of around £130m. Most of the purchases took place before the Brexit referendum and the impact afterwards was a real pain.